site.btaBulgarian Insurance Sector Meets Capital Requirements Over 100 Per Cent - Financial Supervision Commission

Bulgarian Insurance Sector Meets Capital Requirements Over 100 Per Cent - Financial Supervision Commission

Sofia, February 3 (BTA) - The Financial Supervision Commission (FSC) Friday published reports containing data on the results of the Bulgarian Pension FundsТ Assets Review (PFAR) and of the Insurance/reinsurance Balance Sheet Review (IBSR), as well as data on the results of the conducted Stress Tests of Insurers and Reinsurers.

Information on the results of the reviews of insurers/reinsurers and of pension funds is provided by the independent external reviewers and is summarized by international consulting company Regional Consortium Ernst & Young, FSC Chairperson Karina Karaivanova said at the BTA National Press Club.

"The Bulgarian insurance sector meets the capital requirements over 100 per cent," Karaivanova pointed out. "Most companies have taken action to increase their capital. If they fail to do so, the FSC will take recovery follow-up action," she said.

The IBSR shows that after the consistency checks performed by the project manager, the aggregated Solvency Capital Ratio (SCR) was 157 per cent and the aggregated Minimum Capital Ratio (MCR) was 313 per cent for solo entities, SCR for Non-Life being 147 per cent and MCR 333 per cent, while for Life sector SCR was 235 per cent and MCR was 238 per cent, groups/sub groups SCR standing at 107 per cent and MCR 187 per cent, all above the prudential requirements.

For 13 undertakings, the total available own funds to cover SCR and/or MCR as at June 30, 2016 was insufficient. For those companies at a deficit, the total amount of the MCR deficit was 25 million leva, and the total amount of the SCR deficit was 50 million leva. These deficits are relatively small checked against the capital requirements and the available own funds of the insurance sector: the aggregate Solvency Capital Requirement is 1,200 million leva, and the aggregate own funds available to cover it are 1,900 million leva.

Out of the 13 companies which had a deficit as at June 30, 2016, seven insurers have already taken the action necessary to increase their own funds to the required level in accordance with the results of the balance sheet review. "Another part of the remaining undertakings also took action which has led to a strengthening of their capital base, although this is not yet fully sufficient," Karaivanova noted. The SCR deficit has thus been reduced to 17 million leva and the MCR deficit to 22 million leva by today's date. As a result, recovery follow-up actions will be imposed by the FSC on five insurance undertakings, which jointly have a market share of 1.49 per cent in the market premium income. These five undertakings will have three months to increase their own funds to cover their Minimum Capital Requirement, and another three months to cover their Solvency Capital Requirement. Two more insurers will have to present to the FSC progress reports setting out measures taken and progress made to meet the Solvency Capital Requirement by the end of 2017.

The results indicate sustainability of the supplementary pension insurance sector. The pension funds' assets are available and are kept at the custodian banks in accordance with the regulatory requirements. No deviations from the applicable regulatory framework have been identified in regard to the review of investments in related parties. Assessing the pension funds' assets, the independent external reviewers concluded that pension insurance companies generally meet regulatory requirements.

The PFAR covered all 18 supplementary obligatory pension insurance funds in Bulgaria (universal and occupational) and all nine supplementary voluntary pension insurance funds. The total value of the assets reviewed amounts to over 93 per cent of the funds' assets.

The PFAR results note the need of adjustments which amount to 33 million leva for the entire sector, or 0,3 per cent of the assets of the 27 pension funds reviewed as of June 30, 2016.